Gold and silver break higher challenging overhead resistance

Gold Today –New York closed yesterday at $1,348.80 yesterday.  London opened at $1,348.

–         The $: € was weaker at $1.1245 down from $1.1167 yesterday.

–         The dollar index was weaker at 94.85 from 95.59 yesterday.

–         The Yen was stronger at 101.62 from yesterday’s 103.26 against the dollar.

–         The Yuan was stronger at 6.6638 from 6.6800 yesterday.

–         The Pound Sterling was stronger at $1.3408 from yesterday’s$1.3338.

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
      2016  09  7

2016  09 6

SHAU

SHAU

289.78

285.59

290.13

285.73

Dollar equivalent @ $1: 6.6638

$1: 6.6800

  $1,352.56

$1,329.77

$1,354.19

$1,330.42

The day after Labor Day in the States clarified the Technical picture and physical gold demand came in with a big thrust sending gold prices higher.

Shanghai took the gold price even higher to $1,354 but London tried to pull it back into the higher $1,340’ as dollar exchange rates tried to recover.

The Yuan was stronger in line with the weakening of the dollar, but this will not change the Yuan’s weakening trend.

LBMA price setting:  The LBMA gold price setting on Monday was at$1,348.75. Yesterday it was at set at $1,330.05.

The gold price in the euro was set on Wednesday at €1,199.32 up strongly on yesterday’s 1,191.05.

Ahead of the opening of New York the gold price was trading at $1,348.00 and in the euro at €1,198.54.  At the same time, the silver price was trading at $19.93.

Silver Today –The silver price jumped up to $19.93, from $19.36yesterday. 

Price Drivers

With the re-opening of New York, yesterday, after a weekend in which they digested the disappointing Jobs report, it became clear that the hopes that had been raised of a rate hike this month were dashed by the report. The jump in prices, seen before the weekend, continued yesterday and caused a massive buy of 14 tonnes of gold into the SPDR gold ETF in the day. This cleared away the impact of the ‘bear raid’ engineered last week with a dumping of $1.5 billion in gold futures as the month ended and overrode the sale of 12 tonnes, seemingly in support of the raid. It did appear on the charts that the next move was down to $1,300 to very big support, but because it was so engineered we doubted its validity. As you can see by the current jump we were right to do so.

Now it is looking at resistance all the way up to close to $1,400. This could be a gauntlet for the gold price, but if physical demand follows through all the way, the way up will be made much easier. Certainly support for the upward path will be given by the Fed’s postponement of a hike until after the elections, when it will not be seen as a political move. With Donald Trump saying that the Fed has caused the equity ‘bubble’ with low rates, if he wins you can expect more vigorous action from the Fed.

In our current issue of the Gold Forecaster we will discuss just what strategy will tremendously increase your returns in a time when gold prices are rising and just how to maximize returns, when it is not.

Gold ETFs – There were purchases of a massive 14.245 tonnes into the SPDR gold ETF but no change in the holdings of the Gold Trust, leaving their respective holdings at 952.135 tonnes and 225.39 tonnes. After negligible moves in the holdings of gold ETFs over the last couple of weeks and then the massive sale of over 12 tonnes last week, while a bear raid on the gold price was underway, the return of markets yesterday saw a big change in physical demand as you can see here.  This week, if physical demand continues at anywhere near these levels it will drive prices higher.

Silver – The silver price followed gold higher to close at $20.04 yesterday and will move up faster than gold in percentage terms, if the rises continue.

Julian D.W. Phillips

www.goldforecaster.com and www.silverforecaster.com

 

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